Score one for the Lucid Group (NASDAQ:LCID) stock bulls. The electric vehicle company got a much-needed boost today when Exane BNP Paribas initiated coverage on Lucid with an “outperform” rating.
An outperform rating is generally considered better than a “neutral” or “hold” rating, but not as bullish as a “strong buy.” So, the “outperform” rating on LCID bodes well for the EV company.
The rating may help explain why LCID is managing to hold its own in morning trading, roughly flat at more than $21 per share while the S&P 500 is down 1.2% and the tech-heavy Nasdaq composite slipped nearly 1.9%
Lucid stock is down more than 10% in the last month, and nearly 50% since the beginning of the year as investors have been disappointed by the company’s production estimates. Earlier this year, LCID was forced to lower its production target for the year to between 12,00 and 14,000 vehicles, from its previous estimate of 20,000. The company blamed supply chain issues for the drop.
It also pushed the launch of its Gravity SUV vehicle from 2023 to the first half of 2024.
That’s a long way from the company’s initial lofty goals. It was just a few months ago that the Lucid Air sedan was named the 2022 Car of the Year by Motortrend. The company was hailing its new Arizona production facility that has a top capacity of 34,000, but an expansion project would push that number to 90,000.
But there’s still reasons to like Lucid. Remember, Lucid is run by CEO Peter Rawlinson, who was the vehicle engineer for the popular Tesla (NASDAQ:TSLA) Model S. If anyone knows how to build a car to compete with Tesla, it’s Rawlinson.
On top of that, the electric vehicle market is continuing to grow — and that’s a trend that will only accelerate. Just in the U.S., the EV market was valued at $171.26 billion in 2020, but that’s expected to grow to $725.14 billion by 2026. That’s a compound annual growth rate of 27.19%.
Analysts have a consensus price target of $35.67 for LCID stock, which represents 63% growth from current prices.
On the date of publication, Patrick Sanders was long TSLA. He did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.